The expulsion of the Jews in 1492 had left a vaccum in the commercial and financial structure of Spain. The Genoese and the Dutch became the chief carriers of Spain`s foreign trade. Spain, governed by grandees more adept in diplomacy and war than in economic affairs, allowed her wealth to depend upon the import of gold; for a time the government grew richer while the people remained poor; but much of the gold was poured out for war, much of it was taken by foreign merchants carrying Spain`s trade, until the government was almost as poor as the people. Spain repeatedly repudiated its debts (1557, 1575, 1596, 1607, 1627, 1647) or compelled their conversion into new loans.

If much of Spain`s gold had also been transferred by her 16th- and 17th-century grandees to Swiss bank accounts, the history lesson would be even fuller.

Debt relief certainly didn`t work for Spain.

Prosperity is goods and services to consume; not money — not even `resources,`for resources must be transformed into desirable goods and services. And transforming resources into desirable goods and services requires productive creativity and productive effort. These, in turn, are unleashed (and properly channeled) only by a system of secure and exchangable private property rights defined and enforced under a strong rule of law. (And a strong rule of law is not necessarily the product of strong government.)